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of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum
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Recently, I shared articles about the problems surrounding third-party and first-party fraud. Now I’d like to explore a hybrid type – synthetic identity fraud – and how it can be the hardest type of fraud to detect. What is synthetic identity fraud? Synthetic identity fraud occurs when a criminal creates a new identity by mixing real and fictitious information. This may include blending real names, addresses, and Social Security numbers with fabricated information to create a single identity. Once created, fraudsters will use their synthetic identities to apply for credit. They employ a well-researched process to accumulate access to credit. These criminals often know which lenders have more liberal identity verification policies that will forgive data discrepancies and extend credit to people who appear to be new or emerging consumers. With each account that they add, the synthetic identity builds more credibility. Eventually, the synthetic identity will “bust out,” or max out all available credit before disappearing. Because there is no single person whose identity was stolen or misused there’s no one to track down when this happens, leaving businesses to deal with the fall out. More confounding for the lenders involved is that each of them sees the same scam through a different lens. For some, these were longer-term reliable customers who went bad. For others, the same borrower was brand new and never made a payment. Synthetic identities don't appear consistently as a new account problem or a portfolio problem or correlate to thick- or thin-filed identities, further complicating the issue. How does synthetic identity fraud impact me? As mentioned, when synthetic identities bust out, businesses are stuck footing the bill. Annual SIF (synthetic identity fraud) charge-offs in the United States alone could be as high as $11 billion. – Steven D’Alfonso, research director, IDC Financial Insights1 Unlike first- and third-party fraud, which deal with true identities and can be tracked back to a single person (or the criminal impersonating them), synthetic identities aren’t linked to an individual. This means that the tools used to identify those types of fraud won’t work on synthetics because there’s no victim to contact (as with third-party fraud), or real customer to contact in order to collect or pursue other remedies. Solving the synthetic identity fraud problem Preventing and detecting synthetic identities requires a multi-level solution that includes robust checkpoints throughout the customer lifecycle. During the application process, lenders must look beyond the credit report. By looking past the individual identity and analyzing its connections and relationships to other individuals and characteristics, lenders can better detect anomalies to pinpoint false identities. Consistent portfolio review is also necessary. This is best done using a risk management system that continuously monitors for all types of fraudulent activities across multiple use cases and channels. A layered approach can help prevent and detect fraud while still optimizing the customer experience. With the right tools, data, and analytics, fraud prevention can teach you more about your customers, improving your relationships with them and creating opportunities for growth while minimizing fraud losses. To wrap up this series, I’ll explore account takeover fraud and how the correct strategy can help you manage all four types of fraud while still optimizing the customer experience. To learn more about the impact of synthetic identities, download our “Preventing Synthetic Identity Fraud” white paper and call us to learn more about innovative solutions you can use to detect and prevent fraud. Contact us Download whitepaper 1Synthetic Identity Fraud Update: Effects of COVID-19 and a Potential Cure from Experian, IDC Financial Insights, July 2020
Despite the constant narrative around “unprecedented times” and the “new normal,” if the current market volatility tells us anything, it’s to go back to basics. As financial institutions navigate COVID-19’s economic impact, and challenges that are likely to be different or more extreme than in the past, the best credit portfolio management practices are fundamental. The global pandemic impacts today’s data as existing data and analytics may not accurately reflect what is happening now, resulting in inaccurate portfolio assessment. In order to successfully navigate loss forecasting, predicting borrower behavior and controlling loss ratios, lenders must engage new data, analytics and economic scenarios suited for today’s changing times. In Experian’s latest white paper, “Credit Portfolio Management After the COVID-19 Recession,” we’ll explore best practices to combat the following challenges: Forecasting credit losses despite increased economic volatility Businesses have long used a variety of data, analytics and models to anticipate and project the future direction of their organization based on a number of data points; however, with the onset of the global pandemic, long-standing scenarios became suddenly irrelevant. Predicting borrower behavior given increased financial disparities The post-pandemic and pre-pandemic worlds are very different places for some borrowers. Pandemic-related job losses and other economic effects will not be spread evenly and this variability may be reflected in lenders’ portfolios. Controlling loss ratios In the post-COVID world, it will be mission critical for lenders to use high-quality and up-to-date data to balance priorities and identify which areas of their portfolio need attention now. Whether your portfolio is doing better than expected, as expected, or worse than expected, now is the time to refresh portfolio management strategy. Lenders should be watching for early indicators in loan portfolios to better navigate a fluctuating economy and that requires new resources and better tools. Take control of your business’ trajectory. Download now
The automotive industry has experienced extreme change over the past nine months. And while most of the attention has centered on the transition to digital retailing and inventory shortages, a lesser known shift has occurred: consumers opting for larger vehicles. The change has reverberated throughout the automotive finance market, and as dealers and lenders navigate the upcoming months, it’ll be important for them to assess how this trend evolves. What Types of Vehicles Are Consumers Buying? At the beginning of the pandemic, we observed the return of full-sized pickups as the vehicle of choice for consumers, making up nearly 16% of financed vehicles in Q2 2020. This was likely driven by automaker incentives, such as lower interest rates and cashback programs, that made purchasing an expensive vehicle more manageable. But as the year progressed, consumer preferences have shifted once again. According to Experian’s Q3 2020 State of the Automotive Finance Market, small SUVs became the most financed vehicle segment, making up 26.01% of all financed vehicles during the quarter. They are followed by mid-size SUV’s (24.15%) and full-sized pickup trucks (14.61%). With incentives scaling back, it will be interesting to see how consumer preferences evolve over the coming months. Consumer Preference Drove the Loan Amounts Higher Based on the most popular vehicle segments, the reasons behind increased loan amounts becomes clearer, even with incentive programs. The average new loan amount was roughly $34,600, rising more than $2,000 compared to Q3 2019. But used vehicle loans also saw an increase, with the average used loan amount coming in at $21,438, a $945 increase. Considering the difference in loan amounts between new and used, it makes sense that some consumers have shifted back to the used vehicle market, particularly as the pullback on incentives begins. Consumers Lean into Longer Loans Somewhat surprising, considering the significant increase in the average loan amount, the average monthly payment saw a modest increase, rising $11 to reach $563. We saw a similar pattern in the used market, with the average monthly payment for a used vehicle increasing only $6 to $397 compared to last year. Much of this has been driven by consumers continuing to opt for longer loan terms. The average loan term for a new vehicle was 69.68 months, up from 68.98 last year. In fact, more than 44% of new vehicle loans had terms between the 61- and 72-month range, while more than 28% had loan terms between 73- and 84-months. Combined with lower interest rates, the extension of loan terms contributed to making monthly vehicle payments more manageable for consumers. As we continue to navigate the recovery, consumers’ unique needs and preferences will continue to evolve. With automakers pulling back on incentives, how will consumer purchasing behaviors be impacted? There are many unknowns about the months and years ahead, but by staying close to the trends, the industry will be better positioned to help consumers stay within budget and minimize risk in their portfolios. To view the full Q3 2020 State of the Automotive Finance Market report, click here.
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With the National Automobile Dealers Association (NADA) Show set to kickoff later this week, it seemed fitting to explore how the shifting dynamics of the used vehicle market might impact dealers and buyers over the coming year. Shedding light on some of the registration and finance trends, as well as purchasing behaviors, can help dealers and manufacturers stay ahead of the curve. And just like that, the Special Report: Automotive Consumer Trends Report was born. As I was sifting through the data, one of the trends that stood out to me was the neck-and-neck race between Millennials and Gen X for supremacy in the used vehicle market. Five years ago, in 2019, Millennials were responsible for 33.3% of used retail registrations, followed by Gen X (29.5%) and Baby Boomers (26.8%). Since then, Baby Boomers have gradually fallen off, and Gen X continues to close the already minuscule gap. Through October 2024, Millennials accounted for 31.6%, while Gen X accounted for 30.4%. But trends can turn on a dime if the last year offers any indication. Over the last rolling 12 months (October 2023-October 2024), Gen X (31.4%) accounted for the majority of used vehicle registrations compared to Millennials (30.9%). Of course, the data is still close, and what 2025 holds is anyone’s guess, but understanding even the smallest changes in market share and consumer purchasing behaviors can help dealers and manufacturers adapt and navigate the road ahead. Although there are similarities between Millennials and Gen X, there are drastic differences, including motivations and preferences. Dealers and manufacturers should engage them on a generational level. What are they buying? Some of the data might not come as a surprise but it’s a good reminder that consumers are in different phases of life, meaning priorities change. Over the last rolling 12 months, Millennials over-indexed on used vans, accounting for more than one-third of registrations. Meanwhile, Gen X over-indexed on used trucks, making up nearly one-third of registrations, and Gen Z over-indexed on cars (accounting for 17.1% of used car registrations compared to 14.6% of overall used vehicle registrations). This isn’t surprising. Many Millennials have young families and may need extra space and functionality, while Gen Xers might prefer the versatility of the pickup truck—the ability to use it for work and personal use. On the other hand, Gen Zers are still early in their careers and gravitate towards the affordability and efficiency of smaller cars. Interestingly, although used electric vehicles only make up a small portion of used retail registrations (less than 1%), Millennials made up nearly 40% over the last rolling 12 months, followed by Gen X (32.2%) and Baby Boomers (15.8%). The market at a bird’s eye view Pulling back a bit on the used vehicle landscape, over the last rolling 12 months, CUVs/SUVs (38.9%) and cars (36.6%) accounted for the majority of used retail registrations. And nearly nine-in-ten used registrations were non-luxury vehicles. What’s more, ICE vehicles made up 88.5% of used retail registrations over the same period, while alternative-fuel vehicles (not including BEVs) made up 10.7% and electric vehicles made up 0.8%. At the finance level, we’re seeing the market shift ever so slightly. Since the beginning of the pandemic, one of the constant narratives in the industry has been the rising cost of owning a vehicle, both new and used. And while the average loan amount for a used non-luxury vehicle has gone up over the past five years, we’re seeing a gradual decline since 2022. In 2019, the average loan amount was $22,636 and spiked $29,983 in 2022. In 2024, the average loan amount reached $28,895. Much of the decline in average loan amounts can be attributed to the resurgence of new vehicle inventory, which has resulted in lower used values. With new leasing climbing over the past several quarters, we may see more late-model used inventory hit the market in the next few years, which will most certainly impact used financing. The used market moving forward Relying on historical data and trends can help dealers and manufacturers prepare and navigate the road ahead. Used vehicles will always fit the need for shoppers looking for their next vehicle; understanding some market trends will help ensure dealers and manufacturers can be at the forefront of helping those shoppers. For more information on the Special Report: Automotive Consumer Trends Report, visit Experian booth #627 at the NADA Show in New Orleans, January 23-26.
The automotive industry is constantly changing. Shifting consumer demands and preferences, as well as dynamic economic factors, make the need for data-driven insights more important than ever. As we head into the National Automobile Dealers Association (NADA) Show this week, we wanted to explore some of the trends in the used vehicle market in our Special Report: State of the Automotive Finance Market Report. Packed with valuable insights and the latest trends, we’ll take a deep dive into the multi-faceted used vehicle market and better understand how consumers are financing used vehicles. 9+ model years grow Although late-model vehicles tend to represent much of the used vehicle finance market, we were surprised by the gradual growth of 9+ model year (MY) vehicles. In 2019, 9+MY vehicles accounted for 26.6% of the used vehicle sales. Since then, we’ve seen year-over-year growth, culminating with 9+MY vehicles making up a little more than 30% of used vehicle sales in 2024. Perhaps more interesting though, is who is financing these vehicles. Five years ago, prime and super prime borrowers represented 42.5% of 9+MY vehicles, however, in 2024, those consumers accounted for nearly 54% of 9+MY originations. Among the more popular 9+MY segments, CUVs and SUVs comprised 36.9% of sales in 2024, up from 35.2% in 2023, while cars went from 44.3% to 42.9% year-over-year and pickup trucks decreased from 15.9% to 15.6%. 2024 highlights by used vehicle age group To get a better sense of the overall used market, the segments were broken down into three age groups—9+MY, 4-8MY, and current +3MY—and to no surprise, the finance attributes vary widely. While we’ve seen the return of new vehicle inventory drive used vehicle values lower, it could be a sign that consumers are continuing to seek out affordable options that fit their lifestyle. In fact, the average loan amount for a 9+MY vehicle was $19,376 in 2024, compared to $24,198 for a vehicle between 4-8 years old and $32,381 for +3MY vehicle. Plus, more than 55% of 9+MY vehicles have monthly payments under $400. That’s not an insignificant number for people shopping with the monthly payment in mind. In 2024, the average monthly payment for a used vehicle that falls under current+3MY was $608. Meanwhile, 4-8MY vehicles came in at an average monthly payment of $498, and 9+MY vehicles had a $431 monthly payment. Taking a deeper dive into average loan amounts based on specific vehicle types—as of 2024, current +3MY cars came in at $28,721, followed by CUVs/SUVs ($31,589) and pickup trucks ($40,618). As for 4-8MY vehicles, cars came in with a loan amount of $22,013, CUVs/SUVs were at $23,133, and pickup trucks at $31,114. Used 9+MY cars had a loan amount of $19,506, CUVs/SUVs came in at $17,350, and pickup trucks at $22,369. With interest rates remaining top of mind for most consumers as we’ve seen them increase in recent years, understanding the growth from 2019-2024 can give a holistic picture of how the market has shifted over time. For instance, the average interest rate for a used current+3MY vehicle was 8.0% in 2019 and grew to 10.2% in 2024, the average rate for a 4-8MY vehicle went from 10.3% to 12.9%, and the average rate for a 9+MY vehicle increased from 11.4% to 13.8% in the same time frame. Looking ahead to the used vehicle market It’s important for automotive professionals to understand and leverage the data of the used market as it can provide valuable insights into trending consumer behavior and pricing patterns. While we don’t exactly know where the market will stand in a few years—adapting strategies based on historical data and anticipating shifts can help professionals better prepare for both challenges and opportunities in the future. As used vehicles remain a staple piece of the automotive industry, making informed decisions and optimizing inventory management will ensure agility as the market continues to shift. For more information, visit us at the Experian booth (#627) during the NADA Show in New Orleans from January 23-26.
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typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.